A mortgage payment looks like one number, but it’s really a tug-of-war between two: the interest the lender charges on what you still owe, and the principal that actually pays the loan down. This tool shows the monthly payment, then pulls back the curtain on the part that’s easy to miss — the total interest over the life of the loan, and how each payment splits between the two.
How it works
A fixed-rate mortgage is built so that the same payment, repeated every month for the whole term, pays the loan off exactly at the end. The math finds the payment where that works out, given three things: the amount you borrow, the annual rate, and the term in years. As the CFPB puts it, a 30-year loan is “calculated so that if you keep the loan for the full loan term and make all of your payments, you will precisely pay off the loan at the end.”
Each month, interest is charged on the balance you still owe; whatever’s left of the payment goes to principal. Because the balance starts high, early payments are mostly interest — and that flips slowly over the years. The amortization schedule above walks through it, payment by payment.
An example
Take the values already filled in: a $300,000 loan at 6.5% over 30 years. The monthly principal-and-interest payment is about $1,896. Keep the loan the full 30 years and you’ll pay roughly $382,600 in interest — more than the home loan itself — for a total of about $682,600. The first payment alone is around $1,625 interest and only $271 principal; it takes years before that balance tips the other way. Lower the rate by even half a point, or shorten the term, and watch the total interest fall hard.
The part that matters
A monthly payment is easy to say yes to; the total interest is the number that should shape the decision. Three honest things:
- This is principal and interest only. Your real monthly payment usually adds property tax, homeowners insurance, and sometimes mortgage insurance (PMI) and HOA dues — often bundled into an escrow payment. Those can add hundreds of dollars a month, so budget for the full figure, not just the P&I here.
- The rate and the term do the heavy lifting. Over decades, a small difference in rate is worth tens of thousands of dollars, and a shorter term slashes total interest (while raising the monthly payment). Try both sliders and compare the total, not just the payment.
- It assumes a fixed rate and exactly the scheduled payments. An adjustable-rate loan, extra principal payments, or refinancing will all change the picture — and extra principal early is the cheapest interest you’ll ever avoid.
Change the numbers above to match the loan you’re weighing, and look past the monthly payment to what the whole thing costs. If you already have a mortgage and rates have dropped, the refinance calculator shows whether switching is worth it.